Pay rises for senior bankers hit 10%

Banking chief executives received an average pay rise of 10 per cent last year as US banks handed their heads much more generous packages than their European rivals, highlighting the widening remuneration gap on either side of the Atlantic.

The analysis of total pay awarded to the heads of 15 banks – including Goldman Sachs' Lloyd Blankfein and Lloyds Banking Group's António Horta-Osório – was exclusively compiled for the Financial Times by Equilar, a US pay research group.

Lloyd Blankfein, chief executive officer of Goldman Sachs Group Inc. and Brian Moynihan, president and chief executive officer of Bank of America Corp., speak to the media after a meeting with U.S. President Barack Obama at the White House in Washington, D.C.

It shows they took home $13 million on average in 2013, 10.1 per cent more than in the previous year, more than compensating for a drop the year before and taking average pay levels back to slightly above 2011.

The pay rises came in a year when banks paid record fines in the US for wrongdoing ranging from mis-selling mortgages to violating US sanctions. The 15 banks paid $48 billion in fines last year, up from $30 billion in 2012, according to an FT analysis.

However, the jump in pay also coincided with an average increase in net income of 46 per cent during the year and strong share price performance, especially in the US.

The KBW index of US banks – which excludes Goldman Sachs and Morgan Stanley – was up 35 per cent, compared to a 30 per cent rise for the S&P 500. The Eurofirst 300 banks index rose by 18.1 per cent during the year, outperforming the FTSE All World index by 2.71 per cent.

Ross McEwan, the New Zealand-born retail banker who has led RBS since last autumn, epitomised this trend: his pay package of $4m – the lowest of all 15 – was a fifth of Mr Blankfein's.

Analysts expect the gulf to widen even further as more banks retrench from high-paying investment banking businesses and as a European Union bonus cap forces many lenders to cut the pay for top management.

The analysis by Equilar added up base salaries, cash bonuses and various other benefits. It also included option and stock awards that were granted in 2013, some of which were to reward performance in previous years.

Among the UK lenders, Mr Horta-Osório was the best paid with a $12.5m package, an increase of 17 per cent on a year earlier. It came in a year in which Lloyds posted its first increase in pre-tax profit in three years and in which its share price rise of more than two-thirds beat all 15 banks.